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Suresh P. Iyengar

Mumbai, Oct 6 The fall in freight rates is unlikely to benefit commodity imports due to significant depreciation in value of rupee against dollar.

In a bid to fight the spiralling inflation, the Government has banned exports of most agriculture commodities (barring sugar) and restricted metal and ore shipments.

Given the fluid global economic conditions, import of edible oil seems to be thriving business while there is a good demand for Indian oil meal in the overseas market.

Freight accounts for about 10 per cent of the total import cost of any agriculture commodity.

Mr K.C. Bhartia, President, Pulses Importers Association of India, said the nominal reduction in freight cost has been offset by the rupee depreciation and high domestic transportation cost.

In fact, Mr Bhartia said, pulses imports have come to a standstill due to stock limits and additional taxes imposed by various state Governments. Currently, only the Government is importing pulses, he added.

Mr B.V. Mehta, Executive Director, Solvent Extractors’ Association, (SEA) said more than the fall in freight cost, edible oil prices have come down by about $700 a tonne and the consumers have already benefited, while the farmers are left in lurch as they are realising less from the kharif crop.

Freight cost has come down by $20-30 a tonne for edible oil importers, he added.

The sharp fall in cane production and consequent dip in sugar output has resulted in sugar prices moving up.

Sugar manufacturers have demanded that the Government should make import of raw sugar duty-free with an obligation to export similar quantity of refined sugar.

The Agriculture Ministry has estimated sugar production at 220 lakh tonnes for 2008-09. The annual consumption is about 225 lt.

However, the Government has a good inventory which can come in handy in case of shortfall.

“Sugar prices in the domestic market are totally controlled by the Government. So, how much the drop in freight cost will help the end consumer is a question mark,” said a sugar company official.

More Stories on : Commodity Markets | Exports & Imports

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